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A company is 40% financed by risk-free debt. The interest rate is 12%, the expected market risk premium is 7%, and the beta of the
A company is 40% financed by risk-free debt. The interest rate is 12%, the expected market risk premium is 7%, and the beta of the company’s common stock is .5. What is the company cost of capital? What is the after-tax WACC, assuming that the company pays tax at a 35% rate?
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Corporate Finance
Authors: David Hillier, Stephen A. Ross, Randolph W. Westerfield, Bradford D. Jordan, Jeffrey F. Jaffe
3rd Edition
0077173635, 9780077173630
